About Your Credit Score

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Before lenders decide to give you a loan, they must know that you're willing and able to repay that mortgage loan. To assess whether you can pay back the loan, they assess your income and debt ratio. In order to calculate your willingness to pay back the mortgage loan, they look at your credit score.

The most commonly used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. The FICO score ranges from 350 (high risk) to 850 (low risk). We've written more on FICO here.

Credit scores only take into account the info contained in your credit reports. They do not consider income, savings, down payment amount, or factors like gender, ethnicity, national origin or marital status. Fair Isaac invented FICO specifically to exclude demographic factors. "Profiling" was as dirty a word when these scores were first invented as it is in the present day. Credit scoring was envisioned as a way to consider solely that which was relevant to a borrower's likelihood to repay a loan.

Deliquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scoring. Your score reflects the good and the bad of your credit report. Late payments lower your score, but establishing or reestablishing a good track record of making payments on time will improve your score.

To get a credit score, borrowers must have an active credit account with a payment history of six months. This history ensures that there is sufficient information in your credit to calculate an accurate score. Should you not meet the criteria for getting a score, you might need to establish a credit history before you apply for a mortgage loan.

Arch Mortgage Corporation can answer questions about credit reports and many others. Give us a call at 561.775.2724.

ration can answer questions about credit reports and many others. Give us a call at 561.775.2724.

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